In the field of financial investing, a “money manager” is an entity (e.g., person or business) that is responsible for managing the securities portfolio of an individual or institutional investor. “Active management” refers to a portfolio management strategy where the manager makes specific investments with the goal of outperforming an investment benchmark index. “Alpha” is a risk-adjusted measure for the active return of an investment portfolio. It is the return in excess of the compensation for the risk borne, and thus commonly used to assess active managers' performances.
Many factors can affect the relative performance of active money managers over time. These factors include the correlation of stocks within an index, stock market volatility, the relative returns of large and small stocks, relative valuations of growth and value stocks, and the distribution of individual stock returns within a given index. Sometimes active managers can face adverse environments even though the markets may be up in general. This is because there may be some periods where active management does not perform well relative to the appropriate benchmark index, even though markets are up in those periods.